CFTC Warns $40 Billion Kalshi of Charges Over Dozens of New Contracts

Months-Long Probe Reaches Kalshi

The Commodity Futures Trading Commission (CFTC) has privately warned Kalshi, the prediction market operator valued at $40 billion, that enforcement charges could arrive soon. News of the warning broke on Tuesday, November 10. The inquiry examines whether the exchange failed to properly notify the regulator before preparing dozens of new products, and people familiar with the matter say it has been running for several months. The CFTC's press office has not commented publicly on the case.

Kalshi spokesperson Elisabeth Diana pushed back on the scope of the probe in a statement. She said only a handful of contracts are involved, that many had not yet opened for trading, and that the matter comes down to procedural mistakes in a few submissions. “We are already addressing the issue,” she said. The exchange has grown into the largest US prediction market on the strength of a regulator that repeatedly sided with its expansion, and the dispute now tests whether that relationship absorbs a formal enforcement case or marks the start of a harder line against the fastest-growing corner of American derivatives.

Self-Certification Under Scrutiny

The legal question turns on a procedure called self-certification. Under it, an exchange can list a new product as soon as the next day without express CFTC approval, provided the operator attests that the contract meets the agency's requirements, including a low risk of manipulation by a market maker or other participant. The shortcut exists because the agency cannot review every listing by hand, so operators carry the burden of proving their contracts are clean. The filings under review span contract trading on oil-price derivatives to a wager on whether Defense Secretary Pete Hegseth faces impeachment, and many of those contracts had not gone live when the review began.

Concerns about the mechanism are not new. Earlier this year, CME Group CEO Terry Duffy warned that some event wagers carried manipulation risk and should never have been listed. In July, the CFTC's market oversight division issued an advisory telling operators not to submit one sweeping certification covering many contracts, and the agency separately cautioned prediction market firms against using excessively broad language in their filings. That guidance did not name any operator at the time. The Kalshi investigation now asks whether the exchange's batch of filings crossed the line the advisory drew, several months after the document was published.

Selig's CFTC Faces a Reversal

The probe lands on a sector that has expanded faster than any other corner of US regulated derivatives since Donald Trump's election two years ago. Kalshi's valuation has reached $40 billion and Polymarket's stands at $21 billion, with trading volume on event contracts swelling around elections, sports and macroeconomic data. The CFTC under Chair Michael Selig has backed that growth, siding with prediction market operators in lawsuits where state officials alleged gambling law violations.

The same agency, however, is running a broad investigation into Polymarket, examining in part whether the platform violated a 2022 settlement that required it to block US users. Kalshi CEO Tarek Mansour has tried to get ahead of lawmakers by pitching insider trading rules for members of Congress and administration officials who trade on their own policy knowledge. Those efforts have not stopped the political wind from turning. Democrats, strengthened by their midterm wins, are preparing to step up industry oversight when the next Congress convenes. Polymarket, which settles trades through an automated market maker system, and Kalshi now face active federal scrutiny at the same time.

A Procedural Case With Wider Stakes

The case will likely be decided on its framing rather than its substance. The July advisory, published on the CFTC's own press release page, warned operators against exactly the filing pattern the Kalshi probe examines, which hands the agency a documented basis for enforcement. Diana's account, that only a handful of contracts were involved and most never traded, points toward a procedural settlement rather than a sector-defining case. The signal to watch is whether any remedy reaches self-certification itself, the mechanism that lets listings go live within a day and that powered the sector's growth. A narrow resolution would preserve the agency's pro-market stance under Selig. A broad one would rewrite listing rules mid-cycle, with Democrats preparing their own oversight push in parallel.